TerraForm Power Upgraded By Goldman Sachs: 'We See Strong Visibility To Hit Growth Expectations'

Goldman Sachs is optimistic on the future of wind and solar power company TerraForm Power Inc. TERP as regulatory and funding risks continue to fade.

The Analyst

Analyst Brian Lee upgraded TerraForm from Sell to Neutral and maintained an $11 price target. 

The Thesis

TerraForm warrants a Neutral rating based on the following factors, Lee said in the upgrade note:

• Tempered expectations following two quarterly misses.
• Subsided regulatory risk surrounding the return reduction potential of Spanish assets.
• A completed equity overhang to fund recent acquisitions.

After two company misses driven by new expenses and issues with asset availability, Lee said he anticipates less risk around estimates with the potential of incremental progress on cost initiatives in 2019.

Regulatory risks tied to TerraForm's Spanish assets have been resolved, the analyst said.

The company's European utility team has outlined new expectations for a cut of regulated returns in Spain, he said.

“We see strong visibility to hit growth expectations under the larger platform including Saeta and a host of existing organic opportunities such as cost savings [and] repowering."

Price Action

TerraForm shares were up 4.17 percent at $11.50 at the time of publication Wednesday.

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